Govt still hopes to earn Rs 40k cr from 2G spectrum sale this year

The government on Friday said it would be able to meet the budgeted target of earning Rs 40,000 crore from the telecom sector this financial year, even as the response to the recently concluded auction of 1,800-MHz band spectrum was lukewarm.

Addressing a press conference, Finance Minister P Chidambaram, also the head of the empowered group of ministers on telecom, announced the modalities to re-auction 1,800-MHz (GSM) spectrum in the four circles that received no bids — Delhi, Mumbai, Karnataka and Rajasthan — and 800 MHz (CDMA) spectrum, which failed to find any taker, were being worked out.

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The government will also put up for auction the spectrum in the 900-MHz band, coming up for refarming, before the May 2013 deadline stipulated by the regulator. This spectrum is held by incumbent operators other than BSNL and MTNL, and the government has decided to permit operators to retain only 2.5 MHz. The rest would be refarmed to the 1,800-MHz band.

“The auction process has not ended. There will be another auction for the unsold spectrum before March 31. We are hopeful we will be able to achieve the target," said Chidambaram.

Explaining the reason for the government’s confidence, Communications Minister Kapil Sibal said, according to his ministry’s calculation, the combined value of the unsold spectrum in the 1,800-MHz and 800-MHz bands, and the base price for the 900-MHz band spectrum to be refarmed (1.3 times of 1,800-MHz spectrum) would be Rs 62,000 crore. “Even if we get 50 per cent of this value at base price, it would give us between Rs 25,000 crore and Rs 30,000 crore. That will be good enough for us to meet the target," he said.

He added the government had got Rs 17,343 crore from the auction of 1,800-MHz spectrum in 18 circles (Rs 9407.64 crore) and one-time fee in those circles (Rs 7,936 crore). Assuming around Rs 4,000 crore of the fee paid by operators who lost their licences due to a Supreme Court order (Videocon, Idea and Telenor, etc) would have to be adjusted, the government would still earn Rs 13,343 crore.

However, experts say, since the operators have to pay only a third of the money upfront (unless the rules are changed for the new auction), the government would be able to garner only between Rs 11,500 and Rs 13,000 crore this financial year.

Sibal said the EGoM on telecom would meet soon to discuss if it needed to re-price the 1,800-MHz spectrum in circles that had found no takers and CDMA spectrum.

The two ministers also attacked the Comptroller and Auditor General (CAG), saying the auction results bore no semblance of CAG’s assessment of a presumptive loss to the exchequer. “The 2G scam of Rs 1.76 lakh crore is a pure myth," said the finance minister, while Sibal added: “Where is the Rs 1.76-lakh-crore scam everyone was talking about sometime back. In the case of 3G, though the government got revenues of over Rs 1,00,000 crore, there was no rollout, so the biggest loser was the common man, who was deprived of the benefit of a service."